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Mobile carriers keep watchful eye on gov't move to cut telecom costs

All News 09:00 June 18, 2017

SEOUL, June 18 (Yonhap) -- South Korea's mobile carriers are keeping a watchful eye on possible moves by the government to cut subscription costs for telecom services that will impact their earnings, industry watchers said Sunday.

The Ministry of Science, ICT, and Future Planning will hold a session with the State Affairs Planning Advisory Committee, the de facto transition team of the new government, on Monday to review President Moon Jae-in's campaign pledge to cut telecom service fees. The fees have received flak for unnecessarily burdening consumers.

While the new government sought to abolish the basic subscription fee of 11,000 won (US$9.83), mobile carriers have raised concerns that the change will adversely hurt their operations and earnings that are critical for future investment.

You Young-min, the nominee to head the Ministry of Science, ICT and Future Planning, earlier hinted there are many ways the government can cut telecom costs other than the abolishment of basic fees.

Accordingly, the ministry and the committee are anticipated to open discussions to find alternative options, including raising monthly discounts to 25 percent from the current 20 percent.

Other plans include the government inducing mobile carriers to release a service package with data of 1GB priced below 20,000 won (US$17.60) per month, which would be more reasonable than the existing 30,000 won-level packages bundled with 300MB data.

Market watchers, meanwhile, said the government is unlikely to come up with a finalized plan immediately, with policy measures to likely to come after July.

"The minister nominee is expected to hold meetings with CEOs of the three mobile carriers and discuss ways to cut prices. But it is unlikely that they will easily come up with a discount plan," Kim Hong-sik, an analyst at Hana Investment & Securities said in a report.

Mobile carriers keep watchful eye on gov't move to cut telecom costs - 1


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